Japanese yield curve driving market – Nomura

Bilal Hafeez, Research Analyst at Nomura, notes that the Bank of Japan Governor Kuroda started indirectly talking about steepening the Japanese yield curve at the beginning of the month.

Key Quotes

“Now the latest ECB meeting has seen it refrain from indicating an extension of its QE programmes beyond March 2016. Together these events have provided the perfect backdrop for yield curves to steepen – and steepen they have.

In fact, over the past few days, the Japanese yield curve has almost reversed its entire flattening seen this year. The US and European yield curves have also steepened, though not by the same magnitude. The upcoming BOJ meeting on 20-21 September will therefore take on global significance – any sign of tapering or inaction could see these moves extend.”